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Alabama Senate passes economic-incentives overhaul

The Alabama Senate on Tuesday approved a major piece of economic-development legislation that would remodel the way the state provides incentives to companies it is trying to recruit.

The Alabama Jobs Act would create a pay-as-you-go plan for companies receiving tax abatements, along with other incentives for creating jobs in the state. Alabama's existing model provides funding upfront that sometimes totals in the millions.

The bill passed 31-1.

The legislation is one of several economic-development bills being pushed by Alabama Gov. Robert Bentley. The governor stopped by both the House and the Senate on Tuesday to promote the package.

Speaking with reporters on Tuesday afternoon, Bentley said strong incentives packages are important for making Alabama more competitive with neighboring southern states.

"Our incentives are 15 years old," he said. "They are based primarily on debt. We want to get away from being based on debt and to be based more on production."

Companies would be eligible for the abatements on projects that create at least 50 new jobs. Credits would include receiving 3 percent of the previous year's wages paid to new employees, along with a credit of 1.5 percent of the total capital investment made by the company.

The bill also requires a contract with the state that includes clawbacks for when companies receive incentives but then fail to meet their investment or job-creating obligations.

State Sen. Phil Williams, R-Rainbow City, said in an "ideal world," incentives would not be needed and states and companies could compete on merit.

"This gives us the ability to keep the pipeline filled with people who are living in Alabama," he said.

The Senate also approved an amendment establishing an $850 million cap on incentives offered each year.

State Sen. Trip Pittman, R-Montrose, was the single vote against the legislation. Pittman said he voted against the bill because of a philosophical disagreement with using government funds to subsidize jobs.

"I believe that we need to provide a good environment for all our businesses, existing businesses," he said in an interview. "We have a meritocracy in America, and it should be based on somebody's effort, their innovations or products. And you know they are creating some unintended consequences with competing existing businesses or new businesses with jobs that are incentivized."

Senators have yet to debate a separate bill to provide additional incentives for companies that relocate to rural counties. However, a point of contention among legislators is deciding how to define what a "rural county" is.

Bentley said he would say the definition should include underdeveloped counties.

A third bill designed to incentivize existing business to expand in the state is already on the governor's desk. Two more have yet to come up for debate.